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Maximizing your utility since 2013

Category Archives: Demographic Economics

One of the biggest economic issues that we’ll have to deal with in the near future is an aging population. This will result in a shrinking working age population that will have to finance the pensions of a growing retired population. Given the magnitude of this issue, it is quite pressing to know how aging will affect the economy.

It is no surprise that – everything else equal – aging will have detrimental effects on the economy. But everything else is usually not equal: people adjust to new situations and this must be accounted for. What adjustment mechanisms will people take? Furthermore, are pension reforms that are in progress in many developed countries (e.g. raising the retirement age) effective? Can these adjustment mechanisms and reforms help us avoid a crisis?

Marriage has changed a lot over the history of humankind. The earliest societies tended to be polygamous, then there was a switch to monogamy. We did not stop there, however. Currently, most societies practice serial monogamy. That is, monogamy with divorce and remarriage.

How can these transitions between marriage regimes be explained? Why did humanity start out as polygamous, and what prompted us to switch to monogamy, and then later on to serial monogamy? Answering such questions elegantly requires a unified theory of marriage, which is what this post is about.

Most countries generally prefer higher quality immigrants. In most situations, this refers to educated, high-skilled, high-ability and motivated people who will be successful on the labor market. To increase the quality of the immigrant pool, many countries have turned to selective immigration procedures. This basically means that the higher the immigrant’s quality, the easier it will be for them to obtain a visa.

However, while skill and education levels are usually observable by immigration officers, other indicators of quality such as ability or motivation are not. This “duality” of quality characteristics poses some challenges: as we will see, increasing selectivity on observable quality characteristics may actually lead to a decline in overall immigrant quality.

The Earth’s population has been growing steadily over the last century, and agricultural production could keep up with it. This means that there were no Malthusian constraints on population. The question in such a situation is for how long population can keep growing.

To answer this question, one has to make several assumptions. For instance, the UN’s calculations assuming a mid-level of fertility (meaning all countries converge to the replacement level of 2.1 births per woman) would imply that world population plateaus off around 11 billion by 2100. But how accurate is this prediction?Continue reading →

Self-reported well-being as measured in surveys is the metric most often used by economists to measure happiness. This post examines the spatial distribution of happiness in U.S. metropolitan and rural areas. We’ll see which are the most and least happy areas in the country.

Furthermore, the post will look at the reasons of the geographical variation in happiness, its long-term trends, and finally some philosophizing about whether happiness and utility are the same thing.

Have you ever wondered why the world is largely monogamous today? This is an especially interesting question if you consider that historically monogamy did not always enjoy such superiority, not even in Western societies. What happened?

While at first it may sound strange, as with everything else incentives play a great role in who marries whom. Thus marriage has been extensively studied by economists as well as sociologists. In this article, I briefly present the three main theories on why humanity has made this transition from polygamy to monogamy. This will include answering: why was polygamy more common in the past, and what made it disappear.